Shares of Mangalore Chemicals & Fertilizers surged more than 12% on BSE amid reports Saroj Poddar-led Zuari Agro Chemicals is willing to offer its 16.43% stake to Vijay Mallya, who currently owns nearly 22% in the company through various UB Group firms.

Although company sources have denied the reports, investors bought the stock on the possibility of open offer. As per Sebi takeover guidelines,Vijay Mallya will have to make an open offer to buy 26% stake from public shareholders if he acquires more than 25% stake in the company.

Markets were also abuzz with rumors that Zuari Agro with choose to sell their stake to the highest bidder, should Deepak Fertiliser make a higher offer. Deepak Fertilizers which has also indicated an interest Mangalore Chemicals currently holds 24.46%, just under the open offer trigger mark of 25%.

“While long-term investors should stay away from the stock, in the short-term it can give good returns if an open offer does take place,” said Sonam Udasi, head (research), IDBI Capital.

With the MCF stock currently trading at R59.40, Deepak Fertilizers would have to shell out R115 crore for purchasing 1.94 crore MCF shares held by Zuari Fertilizers and Chemicals and an additional R183 crore for 3.08 crore shares held by public shareholders, should they go ahead with plans to increase their stake.

While earlier it was believed Zuari Agro may consider a hostile takeover of MCF, Saroj Poddar had clarified the stake was bought for a possible joint venture with Vijay Mallya. According to sources, Poddar is looking to sell the stake as Mallya has not communicated on the JV.